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Nokia's plan to slowly phase out Symbian for Windows Phone 7 and continue selling Symbian devices during the phase out, is increasingly looking like a colossal blunder.  (Source: Nokia)

"Never let go." "I promise."... Apparently customers aren't buying this philosophy when it comes to the quickly sinking Symbian platform. They're jumping ship to Android or Apple.  (Source: Paramount Pictures)
Company's slow transition to Windows Phone 7 may cost it the global lead in smart phone sales

Finland's Nokia Oyj. (HEL:NOK1V) is the world's largest smartphone maker.  Nokia also has a very big problem.

The company recently tied the knot with Microsoft Corp. (MSFT), promising to phase out its proprietary Symbian smartphone operating system for Microsoft's slick new Windows Phone 7 OS.  The company insisted that the move had nothing to do with the fact that an ex-Microsoft Canada executive recently became Nokia CEO.

Regardless of the move's origins the question quickly became when would the switch to Windows Phone 7 be made?  Nokia has opted for a "gradual" transition in which it slowly phases out the operating system.  At the same time it will release Windows Phone 7 handsets, which will live side by side with Symbian handsets.

The approach has its merits, when looked at from a certain perspective.  But Nokia badly underestimated a major issue raised -- nobody will want a phone on a dying platform.

According to reports Nokia's market share loss has accelerated from a slow bleed to a pouring stream.  

Signs of this have crept up in recent financial filings.  Nokia has lowered its Q2 2011 outlook[press release] for devices and services.  It went from predicting 6.6B € ($9.5B USD) to 6.1B € ($8.8B USD).  That's a big drop.  The drop is fueled by lower predicted volumes -- which seem to be stemming from poorer than expected Symbian smart phone sales.

At the same time the company's operating margins have dipped from a predicted 6 to 9 percent to "around breakeven."

Annual targets are also being scaled back.

If there's one ray of sunshine among the storm clouds it's that Nokia reports an "increased confidence" level that it will deliver Windows Phone 7 handset(s) by Q4 2011.

The question, though, is whether that will be too late.  For now Nokia will have to continue trying to pitch customers a dying platform -- Symbian.  Nokia predicted sales of 150 million more Symbian smartphones "in years to come."  Now, as customers defect to Apple, Inc. (AAPL), Research in Motion Ltd. (RIM), and Google Inc.'s (GOOG) Android, it seems like a matter of time before that number becomes the latest financial figure to be slashed at the Nokia headquarters.



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RE: Surprised?
By bplewis24 on 5/31/2011 6:17:47 PM , Rating: 2
Thank you. I'm not surprised at all. In fact, this is one of the exact reasons why I have been scoffing at all reports suggesting that WP7 will be the #2 handset OS by 2013 or whatever it was. Based on what? Current global OS share?

People acted as if everybody that currently owned a Nokia/Symbian phone would magically have their Symbian OS transplanted with WP7, even though that was not possible. So where does this market share come from: an expectation that Nokia owners will definitely buy another Nokia phone regardless of OS. That is so short-sighted it's laughable.

As this article illustrates, nobody will currently be investing their dollars in a lame-duck platform, and no WP7 nokia sets are currently available. So they will obviously go elsewhere right now. And as much "catch-up" as MS is playing in the mobile OS space, that is not a good thing.

Brandon


RE: Surprised?
By robinthakur on 6/1/2011 6:16:54 AM , Rating: 2
Agreed, surely one of the problems with Nokia haemorrhaging market share is that people aren't going back to Nokia devices when they buy new ones? They are buying iPhones or Android phones and not looking back. Personally if I had to go back to using a Nokia phone I don't think I'd be too happy...Brand loyalty assumes that the user has a pleasant experience using the phone and what with Nokia users patiently waiting for better versions of Symbian and Meego, whilst seeing all the Apps you can get on other devices with far higher functionality, don't hold your breath...


RE: Surprised?
By Ramstark on 6/1/2011 12:04:08 PM , Rating: 2
Actually is not about "immediate" switch to other companies, its about the userbase and loyalty that you have achieved as a brand for what? 10 years? I totally agree about the point that MSFT and Nokia have to hurry to deliver, but in this case, they really have to be careful to keep the expected quality from them. If not, all those user who "switched fast" won't return...ever...


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